Venezuela’s state oil company PDVSA has reignited a crucial oil swap with India’s Reliance Industries, a deal that had been halted due to U.S. sanctions. The revival of this arrangement, approved by a U.S. license in July, marks a cautious step forward for both companies. However, experts caution that it’s too early for celebrations.
Earlier this month, a supertanker carrying 1.9 million barrels of Venezuela’s Merey heavy crude set sail for India’s Sikka port. In return, Reliance Industries supplied PDVSA with 500,000 barrels of heavy naphtha—an essential ingredient for Venezuela’s refineries to process its thick crude oil. Documents detailing this exchange, obtained on Thursday, highlight a delicate balance between compliance with U.S. sanctions and business opportunities.
For Reliance, this isn’t its first experience navigating the complexities of international oil deals. India had halted its Venezuelan oil purchases back in March, concerned that U.S. sanctions might have wider repercussions. This pause not only reflected caution over regulatory risks but also highlighted the geopolitical challenges of maintaining favorable relations with the U.S. However, now that the U.S. license is in place, Reliance seems ready to cautiously re-engage with Venezuela.
Venezuela, meanwhile, is facing ongoing challenges. Its oil sector, severely impacted by sanctions, has turned to barter-style deals to stay afloat—exchanging crude oil for vital diluents and other necessary supplies. Reliance’s return is a critical lifeline, but it remains fragile, dependent on the strict terms of the U.S. license.
On the global stage, these oil swaps are relatively small. Yet, they offer a glimpse into the significant influence of U.S. policy adjustments on global trade.
While India was absent from the Venezuelan oil market, Russia and China had become the main buyers of Venezuela’s crude during this period.
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